BRUSSELS -- After President Donald Trump pulled out of the Iran nuclear deal and reimposed punitive banking sanctions last year, European leaders vowed to find a way to enable Tehran to keep doing business with the rest of the world.
After months of delay, three major European allies on Thursday introduced a financial mechanism to do just that.
The new company, called INSTEX, for Instrument in Support of Trade Exchanges, would essentially allow goods to be bartered between Iranian companies and foreign ones without direct financial transactions or using the dollar. By avoiding the U.S. banking system and currency, the hope is that European companies and others will feel confident that they can do business with Iran without being subject to the sanctions.
The European countries -- Britain, France and Germany -- were all signatories to the Iran deal in 2015, as was the United States under President Barack Obama. The Europeans, along with Russia and China, who were also signatories, have all vowed to keep to the terms of the agreement, which was intended to ensure that Iran could not build a nuclear weapon.
On Tuesday, leaders of the U.S. intelligence agencies told Congress that Iran was in compliance with the deal, which only covers nuclear activities and not other issues such as missile development or support for terrorist groups. Trump responded to the report in a Twitter message, saying "Perhaps Intelligence should go back to school!"
The European nations want to encourage Iran to keep in compliance with the deal primarily because they fear that the rapid pursuit of a nuclear weapon by an unrestrained Tehran could lead to a war between Iran on one side and Israel and the United States on the other. European officials say they are also troubled by the ready use by Washington of extraterritorial sanctions that affect European countries.
The new company was registered in France on Thursday and is known technically as a special-purpose vehicle. It will be financed jointly by the three countries and run by a German banker.
A formal announcement was made Thursday in Bucharest, Romania, where EU foreign ministers were meeting. It is unclear exactly when the company will become operational or whether other countries will join.
Jeremy Hunt, the British foreign secretary, said in Bucharest that the registration "is a clear, practical demonstration that we remain firmly committed" to the Iran deal, "for as long as Iran keeps implementing it fully."
In Iran, the deputy foreign minister, Abbas Araghchi, welcomed the announcement as "the first step within the set of commitments the Europeans have made to Iran which I hope will be fully implemented and not be incomplete," the official Islamic Republic News Agency reported.
U.S. officials have tried to dissuade the Europeans from setting up the company and have argued that it would produce little trade.
On Thursday, the State Department issued a statement saying that it was following reports about the company but that it did not expect the mechanism to have any impact on Washington's "pressure campaign" against Iran.
"As the president has made clear," the statement said, "entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies."
Sen. Tom Cotton, R-Ark., also released a statement Thursday condemning the financial backchannel.
"Our EU partners should focus on curbing Iran's efforts to develop ICBMs, repress their citizens, take foreign hostages, and conduct assassination plots on European soil instead of succumbing to the regime's nuclear extortion," the statement said.
The Trump administration says that by squeezing Iran it is not aiming to overthrow the government but is simply trying to force it into fresh negotiations on a broader range of issues. Those include ballistic missiles, Iranian forces fighting for the Syrian government, and support for groups like Hamas and Hezbollah, which Washington and the European Union accuse of sponsoring terrorism.
The Europeans also share many of Washington's concerns about Iran's actions and human-rights record, but they say those issues fall outside the scope of the nuclear deal.
Still, the Europeans have been particularly angry about recent attacks or attempted attacks by Iran against groups in Europe that oppose the government in Tehran, and they have been talking to Iran about modifying its behavior.
Last month, the European Union imposed its first sanctions on Iran since the nuclear deal in reaction to the plots and to missile testing. The bloc also added two Iranian individuals and an Iranian intelligence unit to its terrorist list.
A Section on 02/01/2019